Thursday thoughts: “Raise your prices”

In the tax profession, we’re talking more about pricing lately. Generally, our pricing is too low and needs to increase. Talking about this and encouraging colleagues to raise their prices is generally a good thing.

But pricing is just one part of the business model. A business model is a framework or blueprint that explains how a business creates and captures value. (There’s a lot of writing on business models and what these terms mean. That discussion is beyond the scope of this brief post, but I’ll come back to it eventually.)

So pricing answers the last component, about capturing value, but it doesn’t address the first component: creating value. And if we’re not changing and improving the value we create, then we’re making it more difficult to capture more value, i.e., raise our prices.

And yes, we can argue that our costs have increased due to labor being more expensive and compliance being more difficult. But that doesn’t directly translate into the client perceiving that we’ve created more value. (This is the point of the “sell me this pen” test from The Wolf of Wall Street.)

So the key to capturing more value—i.e., raising prices—is to work with clients who perceive greater value in what we create. And this is the result of good positioning.

Now for your thoughts…

Are you comfortable with your pricing? If not, why not?